The dollar continues to slide. Gold continues to rise. The stock market is defying all logic – unless you subscribe to the idea that stimulus and bailout money has temporarily pumped up the Dow and the retail suckers have bought back into the game in effect setting themselves up for the slaughter. In that case the Dow is performing exactly as expected.
All signs now point to a second stock market crash which may or may not be preceded by a second liquidity crisis and if not, then followed by one. Greg Simmons of Scopelabs.net and RealityArbiter.com is fervently warning his clients that both events, a second stock market crash and another liquidity crisis are imminent.
The signs are overwhelming. The US Treasury is now bending the tax rules to prevent commercial real estate owners from going under – the latter of which was inevitable had the US Treasury not taken preemptive action (it still could be inevitable). Credit is contracting, not expanding as the Fed and US Treasury would desire. Rampant unemployment, a failing retail sector, a failed industrial sector, declining income and household net worth, declining confidence in our new President, foreign diversification away from US Treasuries (and hence the dollar), a bankrupt FDIC and an insolvent banking system on the verge of collapse – the last straw of which will drop in the form of Option ARMs and commercial mortgage defaults and exacerbated by derivatives losses, a Federal government unable to control its banking sector, its national debt, its fiscal spending, a virtual failure in all regards, bankrupt states and municipalities, the Iran deadline, the China credit bubble, and inevitable price increases due to monetary inflation spell only one thing for the US economy – a downward spiral.
We are not rebounding. We are failing. We are firing nuclear weapons of debt and inflationary destruction at a problem that could have been solved by now. But rather than swallowing their deflationary pill the banks whined and cried and threatened martial law if they did not get their way. What they should have gotten was the big middle finger. Instead they got coddled.
The Market Oracle just put out two articles that provide the most compelling evidence so far that a second crisis, be it a stock market crash, a liquidity crisis, or both, are inevitable. Here’s a thought – I was born and raised in southern California and lived through quite a few earthquakes. If there’s one thing I know about earthquakes, especially the big ones, they’re always followed by aftershocks. And the aftershocks can do as much damage as the original quake.
Economic Fundementals Suggest This Fall and Winter Could Get Ugly
Legendary Investor Betting on Another Stock Market Crash
Hold onto your bootstraps. Stash some cash and gold in a safe. Stock up on canned goods. This winter could be a rocky one. Below is the best depiction of the US Economic landscape I have seen.
Red Arrows Indicate On Target
